TikTok e-commerce business rules in 2022

What was the first thing to do when launching a new brand?

Open a brand store. To be a so-called brand, you must first have your own piece of land and then wait for the right price to sell it. This is the logic of the shelf e-commerce era.

In the era of content e-commerce, this logic has changed. The first thing a new brand should do is not necessarily to open a store.

According to a report: From January to November 2021, the average monthly transaction volume of new brands on Douyin e-commerce increased by more than 24% month-on-month; in November, the number of new brand products selected for the "Douyin e-commerce new product pool" increased by 77% compared with May.

These data come from the "2022 Douyin E-commerce New Brand Growth Report". The report extracts young brands established after 2016 with three major characteristics (using emerging digital channels, using innovative marketing methods, and meeting new consumer needs) as samples, and disassembles the growth process of these 280 brands.

The rapid growth of these new brands on Douyin e-commerce almost all started with the same action: "creating content", including live broadcasts and short videos. However, the abilities required for live streaming, producing short video content, and opening a store are completely different, and the brand growth effects they bring are also different.

From opening stores to live streaming, this is just one of the changes. More changes are hidden in the grand and profound context of the times, such as the emergence of new technologies, the growth of new groups, the reshaping and exploration of new markets, etc.

Against this backdrop, the competitive situation faced by new brands is vastly different from that of the past. There are greater challenges but also more favorable conditions. Overall, opportunities outweigh challenges. The key point is that new brands need to establish a new connection between people, goods and places, enhance the core capabilities of the brand in the era of content e-commerce, and find new business rules that adapt to this era.

Against this background, the "2022 Douyin E-Commerce New Brand Growth Report" released by Douyin E-Commerce has become a milestone event. The growth stories of the new brands in the report have become specific and thought-provoking. A very revealing point is that the biggest opportunity for new brands in 2022 may lie in Douyin e-commerce.

1. Why is Douyin e-commerce more suitable for new brands?

Traditionally, launching a new brand is not an easy task, but a complex project with systematic challenges.

In the era of shelf e-commerce, the offline store opening routines have simply been moved online, but this has brought more challenges because entrepreneurs are not familiar with digitalization. The growth of new brands is also fraught with difficulties, and the dream flywheel effect often stops at the first start.

In comparison, the first step for a new Douyin e-commerce brand to start a business is much simpler. It is enough to open a live broadcast room or use short videos to focus on delivering a hot product to consumers.

For example, the cashmere brand Hongling started to broadcast its own brand on Douyin e-commerce in 2020. At the beginning, the founder broadcast it himself, and started broadcasting on time at 19:00 every night for 100 consecutive days. It was a complete cold start.

Hongling is a new brand founded in 2017. Its cashmere clothing products are very powerful. Compared with big brands, its average customer unit price is more than 1,000 yuan, but it has a high cost-effectiveness. They quickly hit the real consumer needs through brand self-broadcasting and achieved a transaction volume of 99.7 million yuan in November last year.

Also doing brand-owned broadcasting, starting from March 2021, the snack brand Wang Xiaolu’s daily sales increased from 0 to 100,000 pieces in just one month. The core product behind this is a popular tiger skin chicken feet.

In July 2021, Wang Xiaolu significantly increased the priority of Douyin's e-commerce operations, and directly imported Douyin's internal advertising into Doudian. The GMV exceeded 10 million that month, and the content conversion rate increased by 40%.

In Douyin e-commerce, there are many new brands like Hong Ling and Wang Xiaolu that have grasped the "business code".

Lian Coffee conducted rapid testing and iteration in four live broadcast rooms in parallel, and actively participated in various Douyin e-commerce activities, such as the Food and Beverage Festival in June and the 818 Good Products Festival in August. Finally, it successfully launched a new brand with a hit product, "Freshly Brewed Espresso".

Behind the rapid growth of new brands such as Hongling, Wang Xiaolu, and Lian Coffee through Douyin e-commerce, there are actually four underlying logics behind the rapid growth of new brands in the content era, which are also the fundamental reasons why Douyin e-commerce is more suitable for new brands:

1. A form that is easier to communicate

First, compared with the graphic and text formats of shelf e-commerce, the short video and live broadcast formats of Douyin e-commerce can more effectively showcase the outstanding selling points of new brands and new categories that are different from "old brands". In essence, it builds a communication scenario that is more conducive to those new brands with "ideas" to connect with consumers.

In Douyin e-commerce, new brands can apply the O-5A brand asset methodology to expand the new brand user base and improve the efficiency of population conversion by accumulating relationship assets and fine-tuning operations through population stratification, thereby further establishing brand competitive barriers.

2. Relieving supply chain pressure

In the traditional sense, the core of a new brand opening a store is the "store", while the core of new brands on Douyin e-commerce is the "product". Those manufacturers and source merchants who were originally engaged in the supply chain have gradually emerged in the era of content e-commerce. Why? Because the personnel composition of product development and store management is different, and short video platforms now focus more on single products to drive series, these supply chain advantages have been released, which is what was mentioned in the previous story: "one hit product is enough." Doing so will result in lower costs, a lighter asset model, and a more focused and direct operation.

Coincidentally, the "2022 Douyin E-commerce New Brand Growth Report" also pointed out that Douyin e-commerce has become an important battlefield for creating hit products. Since the release of the Douyin hit list, the number of selected new brand products has increased by more than 4 times, and more than 73% of consumers purchase hit products more than once a month.

Low cost is an advantage, but this advantage also requires platform-level support. Why can new brands more easily create popular products through live broadcasts and short videos? Because Douyin e-commerce provides a strong methodological support, it helps new brands quickly build a capability moat around their products in the content era.

In the "2022 Douyin E-commerce New Brand Growth Report", this capability moat is summarized into "eight capability models": product capability, content capability, traffic capability, expert capability, live broadcast capability, service capability, team capability, and brand capability.

Uncle Ni believes that for new brands, the most core capabilities among these eight capabilities are product capabilities, live streaming capabilities, and service capabilities.

Product capabilities enable new brands to quickly determine which core explosive products they want to deliver to target consumers on Douyin e-commerce through product selection, product testing, and product optimization; live streaming capabilities are easier to understand. How to make product combinations, design live streaming scenes, select and train brand anchors, analyze data, etc. all determine the final conversion effect of the brand's live streaming room; service capabilities build the long-term operating capabilities of new brands. Explosive products are just a stepping stone. What determines the sustainable development of new brands is the actions after the transaction, including logistics, after-sales, returns and exchanges, etc.

3. More equal opportunities

Douyin e-commerce’s platform’s “niche equality” mechanism provides more equal opportunities for brands. On the one hand, in traditional scenarios, big brands can easily engage in price wars by copying the innovative strategies of new brands. In Douyin e-commerce, new brands and big brands are actually on the same starting line. Everyone does live broadcasts together and adapts to the same platform rules and business rules. On the other hand, by selling products in live broadcast rooms and intensively releasing short videos to reach consumers multiple times in a short period of time, new brands can also get the same opportunities as leading brands to show themselves to consumers.

4. Leverage influencers to accelerate brand expansion

In this era, the extremely abundant supply of products has led to serious product homogeneity. It is difficult for new brands to grab the market microphone through traditional channels, and user decision-making is also more difficult, that is, "difficulty in choosing". Live streaming and short videos transfer "endorsement" from brand time assets to the "trust between people" established by "experts" and "anchors" through content and fans. Through the "people-based content consumption model" of Douyin e-commerce experts and anchors, new brands are able to invest lower costs to obtain more crowd assets.

Data from the "2022 Douyin E-commerce New Brand Growth Report" shows that with the help of the influencer matrix, a "business growth amplifier", many new brands have quickly entered the market and accelerated the leap in their own influence based on the influence of influencers.

2. How can new brands achieve “goods find people”?

Speaking of crowd assets, this is actually a fertile soil provided by Douyin e-commerce to new brands. It also indicates that the logic of doing business for new brands in this era is changing.

In the past, when a new brand opened a store, it was “people looking for goods”, which was a search logic, and the traffic and demand were relatively fixed.

Now it’s “goods find people”.

In fact, it is a reshaping of the relationship between "demand" and "supply". In the past, the reason why consumers searched for products and then completed their purchases was that the fundamental reason for this link was “lack of content”. Douyin e-commerce’s “goods find people” model is based on sufficiently rich content. The supply side becomes more proactive, and the potential demand of the demand side becomes easier to tap into through “goods find people”, and the boundaries of consumption are greatly broadened and deepened.

Therefore, the essence of new brands starting live broadcasts, or relying on small and medium-sized anchors, expert live broadcast rooms, and short video content is to transform the brand's "passive" position in traditional links into "active" and enter the minds of consumers more deeply. The cost of "creating content" is obviously much lower than the traditional "creating channels" and "creating brands". It is to fulfill the "goods find people" goal at a lower cost and higher efficiency.

So, why should new brands choose to create content on Douyin e-commerce?

First of all, let’s look at the big picture. The business logic of interest-based e-commerce has been proven to be valid. In essence, Douyin has more than 600 million daily active users. Douyin e-commerce uses products and content to arouse interest, stimulate consumer demand, and help new brands make good use of these 600 million+ daily active users.

Secondly, Douyin e-commerce has developed to date and has actually accumulated a very complete methodology, which has further reduced the costs of new brands and increased the success rate.

For example, Wang Xiaolu used the marketing tools of Bytedance to screen the portraits of users who had purchased products and potential users layer by layer, and thus accurately found the target group: "80% of users are women."

After defining the target audience, Wang Xiaolu focused on both performance-based delivery and brand content output, and continued to reach the audience through mid-level KOLs through short videos, live broadcasts, and information streams. He also shot content such as Qiao Shan’s spokesperson advertisement and the "Airplane" fun advertisement. Through interesting and situational content, Wang Xiaolu repeatedly reached precise user groups at multiple points, and took advantage of the characteristics of snacks, which have relatively simple decision-making and certain instant impulse conversion properties. It successfully sold out, achieved monthly sales of tens of millions, and increased content conversion rate by more than 40%.

This approach is effective. Data shows that interest-based e-commerce’s “goods find people” approach brings rapidly growing new business to new brands. Not only Wang Xiaolu, but also countless other new brands.

According to the data from the "2022 Douyin E-commerce New Brand Growth Report", Douyin e-commerce, the number of short video views of new brands is accelerating in 2021. An imaginative new brand "goods find people" ecosystem has already shown a flywheel effect, and this growth will continue.

After telling so many stories about new brands’ “goods finding people”, does Douyin e-commerce only deal with new brands? No, the parallel development from C2C ​​to B2C is still the path that new e-commerce cannot avoid. The future of Douyin e-commerce will inevitably move from "interest market" to "brand mall". Through users' active searches and then to brand malls, the channel of "people looking for goods" will be more perfect.

3. You never know what people will be interested in.

The relationship between Douyin e-commerce and new brands is more like symbiosis rather than employment or host-guest.

This symbiotic relationship is actually determined by business logic. Douyin e-commerce "interest e-commerce" needs more track brands to support interest content. This is limited by the boundaries of the graphic shelf display logic. It is precisely the imagination space for interest e-commerce to continue to expand, because you never know what people will be interested in.

Lian Coffee’s short video content does not simply instill the stereotype of “what coffee is”, but combines the “novel and unique” product expression method of Douyin e-commerce to continuously stimulate users’ consumption interest and tell people “coffee can be drunk like this”.

"Everyone is a barista, and everywhere is a coffee shop." The pre-packaged format has completely overturned the relationship between people, goods and places of traditional coffee products, and accurately aroused the consumption interest of potential users who want both coffee shop quality and DIY.

The essence of arousing interest is actually what we often call "hitting the pain point."

Wing Mian, a domestic sleep brand, has created more than 100 versions of videos. With the help of a huge amount of information, it has continuously iterated and screened out 3 versions of brand content short videos that accurately hit the minds of users, and successfully captured the consumption interests of potential groups. When summarizing the experience, they said: First, the content must be true, and second is the "golden three seconds". In Douyin e-commerce, it is the first three seconds of the video that capture the interest of users.

In the process of cooperating with Douyin e-commerce experts, Yimian has accumulated a wealth of live broadcast slice materials, and can provide thousands of videos every month. After editing and production, it continues to feed back to the brand short videos, thereby continuously stimulating consumer interest at a high frequency and achieving super conversion.

New brands have opened up a new battlefield on Douyin e-commerce, and the energy ceiling of this battlefield depends on how much interest people have. And a conclusion similar to common sense is that people’s interests are endless, because no one knows what people will be interested in in the next second.

Despite this, Douyin e-commerce has extracted some more certain trends from the massive amount of information, and the "2022 Douyin e-commerce new brand growth report" also provides insights into five major consumer trends:

Health is deeply rooted in people's hearts, and more than 72% of consumers care more about product ingredients, materials, etc.; quality is the basis, and new brands that take quality as the foundation of their brand will attract more attention; creativity comes first, and creativity, personality, and efficient connection with young users have become the directions that new brands should focus on; exquisite content has become an important foundation for new brands to make short videos on Douyin e-commerce; the national trend is at its peak, and on Douyin e-commerce, domestic trendy products will continue to rise in popularity.

It can also be predicted that for new brands, content-based live broadcasts and short videos on Douyin e-commerce have become a necessary condition for achieving brand growth.

From this perspective, the imagination space for interest-based e-commerce is huge, which means that new brands not only have a simpler startup model, but also have a broad sky in which to fly.

Author: Uncle Ni

Source: Uncle Ni's Thinking Dark Time